





























































































SENATE 


77th Congress'! 
2d Session j 


/Document 
\ No. 157 


PROGRESS OF THE DEFENSE PROGRAM 


REPORT 

AS. or THE 

DIRECTOR, OFFICE OF FACTS AND FIGURES 

A 

TO THE 

PRESIDENT OF THE UNITED STATES 

ON THE 

PROGRESS OF THE DEFENSE EFFORT OF THE 
FEDERAL GOVERNMENT AS OF 
DECEMBER 31, 1941 


D / r / 0 O 

UNITED STATES 

GOVERNMENT PRINTING OFFICE 
WASHINGTON : 1942 

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[SUBMITTED BY MR. BARKLEYJ 

In the Senate of the United States, 
January 2^ {legislative day, January 23), 1942. 

Ordered, That the report of the Office of Facts and Figures on the 
progress of the defense effort of the Federal Government, transmitted 
to the President on December 2, 1941, be printed, with an accompany¬ 
ing illustration, as a Senate document. 

Attest: 



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REQUEST FOR REPORT 


The White House 
Washington, December 2, 1941 

My Dear Mr. MacLeish: As you know, I am most anxious that the 
general public be fully informed concerning the scope and progress 
of the defense program. 

To this end, I should like the Office of Facts and Figures to prepare 
a report on the progress of the defense effort of the Federal govern¬ 
ment, as of December 31, 1941. The report should be prepared on the 
basis of factual information furnished by the various departments and 
agencies primarily responsible for the program. I have directed the 
Director of the Budget to obtain this information for the use of the 
Office of Facts and Figures. 

It is extremely important that the country should be aware of the 
progress of the defense effort insofar as information can be published 
without giving aid and comfort to those who are not our friends. The 
people of a democracy are entitled to the essential facts and the gov¬ 
ernment of a democracy must continuously have, in critical times as 
well as in peaceful times, the benefit of enlightened public criticism 
and enlightened public understanding. 

Very sincerely yours, 



Hon. Archibald MacLeish, 

Director, Office of Facts and Figures. 


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LETTER OF TRANSMITTAL 

January 14, 1942 

My Dear Mr. President: I have the honor to submit herewith the 
report on the progress of the defense effort you have asked the Office 
of Facts and Figures to prepare. Factual information has been fur¬ 
nished, as you directed, through the Bureau of the Budget by the 
various departments and agencies primarily concerned and these de¬ 
partments and agencies have been most cooperative in reviewing 

the report to check statements of fact. Information provided by the 

• 

report is not, of course, as detailed as it could have been before the war 
but it provides, I think, a basis for an understanding of the defense 
effort down to the end of the year 1941. Certainly the American 
people will understand both the present necessity for restriction 
upon the publication of statistics and the over-all significance of the 
figures of which publication is still possible. 

Broadly speaking, the report presents the story of the effort of the 
American people to arm themselves and to supply their friends in 
the 18 months between the fall of France and the Axis attack upon the 
United States. It constitutes, in other words, an accounting of the 
Arsenal of Democracy from the time, in the summer of 1940, when 
the American people put their labor and their resources at the dis¬ 
posal of the forces opposed to Axis aggression, to the time, in the 
winter of 1941, when Axis aggression struck at the American people 
themselves and changed the Arsenal of Democracy to an Army of 
Democracy. 

The intention of the report is to present the record of this period in 
over-all factual terms. The report, in other words, is in no sense an 
“investigation” of the defense effort nor is it an attempt to interpret 
or to evaluate the defense effort. There were, of course, delays and 
omissions and mistakes in the realization of the program as in the 
realization of all human efforts of comparable magnitude. These mis¬ 
takes and omissions have had and will continue to have critical atten¬ 
tion in appropriate quarters. The report here presented limits itself 
to the record of what was actually done and to the question of present 
ability to move forward. 


The question the American people now wish answered is not the 
question of American production of war materials, of American con¬ 
sumption of consumer goods, over the 18 months from the fall of 
France to the declaration of war by Japan. The American people 
realize that their consumption of consumer goods was higher during 
this period, and their production of war materials lower, than they 
might well have been. What the country wishes to know now is 
where it stands in relation to the work it has to do—what its present 
production capacity of materials of war is—what it is ready to 
accomplish. For in modern warfare it is not stocks in reserve but 
production capacity in prospect which makes a nation powerful. 
Considered in this aspect, the country can take much satisfaction in 
the facts here recorded. 

At the beginning of the period under review T , American industry 
was peace-time industry devoting a minute fraction of its productive 
.capacity to the manufacture of weapons of war. At the close of this 
period—at the beginning of the new period of all-out national effort 
inaugurated by the Message on the state of the Union of January 6, 
1942—American industry was war-time industry, in a position to 
devote to the gigantic task before it all its resources of labor and 
courage and will. New skills had been acquired, new techniques had 
been developed, new lessons had been learned. Some of the types 
of weapons already produced were the finest in the world. 

American industry, in other words, had passed through the period 
of transition, the time of trial and error, and stood ready to under¬ 
take the enormous task of armament of ourselves and those associated 
with us which the Message on the state of the Union projected. In 
a sense the real work is only now beginning. Much remains to be done 
to adapt the American industrial establishment to the labor before us. 
In another sense, however, a tremendous work has already been accom¬ 
plished : the country has been brought to the point at which it can 
now begin to produce the necessary materials of war with assurance 
that the job can and will be done. 

Very respectfully yours, 

Archibald MaoLeish 

Director , Office of Facts and Figures . 

To: 

The President, 

The White House. 



REPORT TO THE NATION 

Introduction to Total War 

We have been at war for more than a month. American 
soldiers and marines have fought at Wake Island, Guam, 
Midway, and the Philippines. The Navy has gone into 
action in the Atlantic and over the broad stretches of the 
Pacific. There have been defeats. But this much our 
small forces on our island outposts have demonstrated: 
We have an Army and a Navy that can fight. 

It is only the beginning. In his address to Congress 
on the State of the Union, the President said that 
American sea, air, and land forces will take stations in 
the British Isles. They will be protecting the Western 
Hemisphere. They will be operating throughout the Far 
East, and on all of the seven oceans. 

Total victory is our objective. Speaking for all of us, 
the President has expressed our common determination 
not to stop short of the destruction of Hitler and the 
certainty, so far as we can establish that certainty, that 
the world will never again sutler the disaster of nazi-ism. 
To win such a war and to win such a peace, it will not 
suffice merely to attain a slight superiority in armaments 
over the Axis aggressors. We must attain an overwhelm¬ 
ing superiority. We must take the offensive on a front 
that extends around the world. We must liberate Guam, 
Wake, and Manila. We must carry the war to the 
enemy’s home ground and hit him again and again where- 
ever we can reach him. 

Our goals have been set: 

This year 60,000 planes. 

Next year 125,000 planes. 

This year 45,000 tanks. 

Next year 75,000 tanks. 

This year 20,000 antiaircraft guns. 

Next year 35,000 antiaircraft guns. 


1 


This year 8,000,000 tons of merchant shipping. 

Next year 10,000,000 tons of merchant shipping. 

No other nation in the world has ever undertaken or 
could ever undertake such a program. In 1942 alone we 
will produce nearly three times as many weapons and 
supplies of war as in all the eighteen months since the fall 
of France. In 1942 alone we will produce as many tanks 
and planes as Hitler did in all the years before 1939 when 
he was preparing for world conquest. 

We Decide to Do the Job 

The immensity of the production that we have set our¬ 
selves reflects the transformation that has been effected in 
the country. From a people reluctant to go about a busi¬ 
ness we hate—the business of war—we have been changed 
to a people determined to get the job over with as quickly 
as possible. 

Napoleon said that war was Prussia’s chief business. 
War is Hitler’s only business. The business of the United 
States, from the days of the Revolution, has been the busi¬ 
ness of peace, the welfare of its people. We were reluc¬ 
tant to exchange our business for Hitler’s. 

Hoping to remain at peace, we gave up many tradi¬ 
tional rights. We passed a neutrality law in August 1935. 
But when Hitler invaded Poland in September 1939, it 
became evident that the neutrality law favored the Nazis, 
who had accumulated vast stores of arms, while penalizing 
the democracies who had not. We repealed those features 
of the law. It was our first learning of the lesson that 
merely wanting peace does not mean that a nation can 
stay at peace. 

But we did more than repeal laws. We began, gradu¬ 
ally, to take action for our own defense. In September 
1939, the President appointed a War Resources Board to 
survey the Nation’s resources. The Board’s recommen¬ 
dations were useful in planning an increased armament 
effort. It was disbanded when its work was finished. 
Then the invasion of the lowlands and the fall of France 


2 




in the spring of 1940 revealed the full power of the Nazi 
war machine and our peril. On May 28, 1940, the Presi¬ 
dent created the National Defense Advisory Commission, 
partly composed of leading industrialists. It was an 
“advisory” commission and our aim was “defense.” 

But the lines of offense pushed closer. By December 

1940, London had become our first line of security. We 
could not let Britain fall for want of food or guns, tanks 
or planes. The President announced our determination 
to serve as the arsenal of democracy. On January 10, 

1941, the lend-lease bill was introduced into Congress. 
To gear our production to the urgent needs of the free 
nations, the Office of Production Management was set 
up, superseding the National Defense Advisory Commis¬ 
sion. O. P. M. pooled the practical experience of industry 
and labor in one organization responsible for assisting 
the Army and Navy. Still hopeful for peace, we were 
resolved to give every aid to the democracies “short of 
war . 7 7 

The End of Business as Usual 99 

As the lend-lease billions began to be spent, the size of 
the job we had undertaken became apparent to all. It 
was a job too big to be reconciled with “business as 
usual.” In August 1941, the Supply Priorities and Allo¬ 
cations Board was created to direct the harsh task of 
curtailing the less essential civilian industries so that our 
available raw materials would go for the production of 
first things—munitions—first. 

Then Hitler showed his hand and it held a sword made 
in Japan. 

To speed the mobilization of the Nation for total war, 
on January 13, the President announced the creation of 
a new War Production Board, with full and final author¬ 
ity over all American production given to one man, the 
chairman. 

How badly or how well have we, in the 18 months just 
past, prepared for the total war now forced upon us 


3 


The dollar, translated into the tools of war, is one yard¬ 
stick by which we can measure what we have done. 

On July 1, 1940, with the tragedy of Dunkirk fresh be¬ 
fore our eyes, we were spending for defense at an annual 
rate of 2 billion dollars. On January 1, 1941, on the eve 
of the lend-lease legislation, our defense spending had 
risen to the rate of 6.2 billions a year. By the following 
July 1, as the Nazis were invading Russia, we were spend¬ 
ing at the annual rate of 10.6 billions. On December 1, 
1941, spending had reached an annual rate of almost 20 
billions. 

True, this was an accomplishment. 

But it is only a fraction of what we must do to survive 
as a free nation. The President has told us that we must 
step up our spending on total war to more than 4 billions 
a month this year, to more than 5 billions a month in 
1943. The record sum of 1.8 billions spent on war in the 
month of December 1941 represented little more than one- 
fifth of our national income. We must now divert more 
than one-half of our national income to the prosecution 
of the war. 

That means the mobilization of every available man, 
woman, dollar, and thing—every plant, tool, machine, and 
bit of material to contribute to our total war effort. Lit¬ 
erally, our military strength will dej^end upon what we, 
the people, can do without. 

The report which follows is the story of the foundations 
we have laid for such a total effort. They are good 
strong foundations. But they are foundations only. The 
President has told us that we “must face the fact of a 
hard war, a long war, a bloody war, a costly war. ’ ’ How 
hard a war, how long, how bloody, at how great a cost, 
depends on how quickly we can erect the necessary struc¬ 
ture upon these vast foundations. 

The answer will be given by 133,000,000 Americans who, 
never having failed in any crisis, now face the gravest 
crisis in their history. 


4 



THE NAVY 

Full Speed Ahead 

In 1922 the American Navy, honoring the promises 
made at the Washington Arms Conference, began to scrap 
and strip and sink more than a million tons of its own 
fighting ships. 

In 1932 the American Navy, becalmed against its will, 
found itself approaching a level below Britain, below 
Japan, below even France and Italy in the number of its 
effective fighting ships. 

At the beginning of 1942 the American Navy had com¬ 
pleted a full year of full speed ahead on its two-ocean 
program and had become within the space of a few 
months the strongest single sea-borne fighting force on 
this planet. 

The “two-ocean navy”—most crucial of all our neces¬ 
sities—is under way. 

When France fell we began to wonder what would have 
happened to us if Britain had not survived Dunkirk. 
On June 14, 1940, an 11 percent expansion of our naval 
forces was authorized by Congress. Five days later, the 
11 percent was raised to 70 percent. By the end of 1940 
the Navy was growing at the rate of $179,000,000 a month. 
The cost of 1941 was over $3,000,000,000. 

When Japan struck we had 17 battleships, and 15 more 
being built. We had 7 aircraft carriers, and 11 more 
being built. We had 37 cruisers, and 54 more being built. 
We had 171 destroyers, with 193 more being built. We 
had 113 submarines, and 73 more being built. 

That is by no means the whole story of the Navy’s 
progress in 1941. By November 1941 the Navy had com- 


5 


missioned 25 new combatant ships. It had added 2,000 
planes to its hangars and its aircraft carriers. Its new 
chain of overseas bases extended far into both oceans, 
and it had enrolled some 5,000 new officers and more 
than 12 times as many men. 

In those 10 months 345 new combatant ships of many 
kinds were under construction, as well as 96 auxiliary 
vessels, 243 mine craft, 225 patrol boats, and other floating 
equipment generally overlooked in accounts of battles at 
sea, but essential if the men-of-war are to go into action. 

Where were they being built? At shipyards up and 
down both coasts and as far inland as the Great Lakes, 
where even submarines are born. At the beginning of the 
year 72 private yards were building ships for the Navy. 
By November there were 133 yards—not including the 
Navy’s own 86 yards. 

The air is as important to the Navy as the sea. The 
Navy’s plane complement of 15,000 has been increased. 
Before the war entered the shooting stage the Navy—and 
the Marine Corps—had more than 5,000 pilots. Thou¬ 
sands more were in training. It is interesting to note 
here that last July the rate of enlistment for naval avia¬ 
tion training was 8 times the rate in May 1940. A greater 
rush was to come. 

The Navy alone has 34 air stations. In Jacksonville 
and at Pensacola the Navy has in operation 2 of its great¬ 
est new training stations. A third is in Corpus Christi, 
Tex. The Corpus Christi Station shows what Americans 
can do when they decide to put their backs into an effort. 
In just 10 month a flat, desert area of sand and scrub was 
turned into a modern city, a city with miles of streets and 
runways, a city of permanent buildings with leagues of 
water mains and power lines, a city with one purpose—to 
help build an air fleet for our Navy. 

Our Far-Flung Line 

All this expansion of air and sea forces has led to 
a vast increase in naval shore establishments. 

e 





American sailors and marines are now serving in New¬ 
foundland ; they are serving at Bermuda; they are serving 
at Great Exuma Island in the Bahamas; they are serving 
at Antigua, Jamaica, St. Lucia, and Trinidad in the 
Caribbean, and in British Guiana in South America. In 
the Pacific our sailors and marines hold a far-flung bas¬ 
tion of bases protecting us from would-be invaders from 
Asia. 

A great deal of work has gone into the development 
of those overseas bases. As Secretary Knox pointed out, 
what we gained in the destroyer trade with Britain was 
not bases but the right to build bases. Defenses against 
attack from the air and attack by sea had to be in¬ 
stalled. Dockyards, coast artillery, barracks, lines of sup¬ 
ply for guns, food and coal, workmen to do the building 
were needed. Nearly half a billion dollars was spent 
in developing our bases last year. 

For some time American ports have been shared by 
nations resisting Axis aggression. Ever since the lend- 
lease program got under way the men-of-war of Great 
Britain have been coming into American yards to repair 
the ravages of battles on distant seas. Merchant ships 
flying the flags of Britain and of Russia, of Holland, 
Norway, Greece, and other countries have also put into 
our harbors. They have been outfitted with degaussing 
cables against magnetic mines, repaired, overhauled, and 
fitted with guns. Liners have been turned into transports 
to carry troops to outposts and to bring British flying 
cadets to our training fields. 

Meantime, impressive numbers of our own ships were 
also being overhauled and converted for more effective 
wartime use. They were strengthened in protective de¬ 
vices and provided with increased fire power. Mine pro¬ 
tection equipment and sky lookout stations were installed. 
To give an example from a single class: Twenty-three old 
destroyers were modernized and recommissioned. Forty- 
one others were converted for important uses. Private 


4380 - 51°—42 


■2 


7 


shipyards shared in the work, gaining valuable experience 
for the big job ahead. 

A Naval Problem Without Parallel 

The Navy’s task today is twofold—it has the greatest 
battle of its life on its hands, and it also has a tremendous 
defensive patrolling job to carry out. The Navy, like the 
rest of us, is at war with Germany in the Atlantic, with 
Japan in the Pacific, with Italy in the Mediterranean. At 
the same time, it must police with Britain the sea lanes 
from Iceland to the bulge of South America and, with the 
British, Dutch, and Australian Navies, the vast Pacific as 
far as Singapore. Fighting ships which might otherwise 
he used to attack the Japanese Navy must serve as two 
great mobile arcs of steel guarding all our continental 
coastline. They must see that German ships do not 
menace the routes to and from the eastern ports of South 
and Central America. They must keep Japanese ships 
clear of the Western Hemisphere from the Straits of 
Magellan to the Northern Bering Sea. This is a naval 
problem without parallel in history. 

Long before Pearl Harbor, the Navy’s ability to give 
and take severe blows had been shown in the waters be¬ 
tween America and Europe, in the months when it was 
obeying the President’s command to shoot first. 

The Navy and the Marine Corps entered the war with 
an unprecedented peacetime strength. Their comple¬ 
ments of fighting forces are being increased with a speed 
that can be matched by no other nation on earth at this 
time. The Navy’s ultimate strength rests soundly on the 
resources, the spirit, and the capacity of this country to 
carry to completion a plane and shipbuilding program 
years before we thought it could be done. 


8 


THE ARMY 

The Two Most lotportant Weapons 

Since the spring of 1940 the United States Army has 
undergone a sixfold expansion in manpower and has made 
remarkable progress toward its thirty-twofold expansion 
in munitions. When France fell, the American Regular 
Army consisted of 230,000 enlisted men and 13,500 officers. 
About 225,000 Rational Guard men, partly equipped and 
trained, were standing by. 

By the autumn of 1941, the Army of the United States 
had reached a strength of over a million and a half men— 
seasoned in the extensive 1941 field exercises—equipped 
for training with modern weapons of warfare despite 
supplies sent to other nations fighting the aggressors. 

Troops in tactical units now form 34 divisions—27 In¬ 
fantry; 5 Armored; 2 Cavalry. Within continental 
United States, the divisions are organized into 9 Army 
Corps. These make up 4 field armies. American troops 
stand guard at Atlantic defense bases from Iceland to 
Surinam in Butch Guiana; in the Pacific, from Alaska 
to the South Pacific area. 

On January 15, 1942, the Secretary of War announced 
the largest expansion plan of all—doubling the size of 
the armored units, adding 32 largely motorized triangular 
divisions of some 15,000 men each, and doubling the com¬ 
bat units of the Air Force—providing, in all, for an 
American Army of 3,600,000 men by the end of 1942. 

To shelter this great new Army, and provide air bases 
and new fortifications, the Army has already completed 
on schedule 450 construction projects—over 50,000 sep¬ 
arate buildings—in 250 areas. 


9 









Stocks of Army clothing and personal equipment now 
on hand are sufficient to maintain the current Army and 
to permit orderly replacement. Additional supplies are 
accumulating to care for new increases in Army strength. 

The two most important weapons in this war are the 
plane and the tank. In these weapons we are already on 
our way to outbuilding the world. We already are pro¬ 
ducing light and medium tanks in quantities and the first 
heavy tank was delivered to the Army the day we declared 
war on Japan. 

One Great Advantage 

A great part of the billions allotted to the Army since 
the fall of France has gone into building new tank 
arsenals, ammunition factories, smokeless powder and air¬ 
craft plants to make these weapons and the shells and 
bombs they will carry. More plants will be built as 
needed to meet the President’s goal for 1942 and 1943. 

Modern war calls for tanks with heavy fire power; anti¬ 
tank guns for our new tank-destroyer outfits; improved 
antiaircraft batteries, searchlight and aircraft detectors; 
vast quantities of machine guns of heavier calibers. It 
also calls for such weapons as the Garand rifle, which has 
three times the rate of fire of the Springfield, and the new 
155-millimeter gun which, mounted on a 35-mile-an-hour 
carrier, can place a 95-pound shell on a machine-gun nest 
10 miles away. It calls for tens of thousands of fighter 
and bomber planes—well armored, carrying ever greater 
fire power, ever heavier bomb loads. 

We begin our offensive against the Axis with one great 
advantage. The Army has benefited by the reports of 
hundreds of Army observers on the fields of battle 
throughout the world. Actual battle tests have been given 
our new equipment by the fighting men of friendly 
nations. 

Despite all handicaps, production of tanks and combat 
vehicles is more than three times that of a year ago, 
giving the Army the mobility needed for offensive action. 


10 



The rate of tank production has been pyramiding and, at 
present, far exceeds estimates of a year ago. The 1942 
goal of 45,000 tanks is great enough to equip and main¬ 
tain with replacements more than 60 armored divisions— 
in action. 

Production of guns of all types has increased nearly 
five times, while production of ammunition is nine times 
that of a year ago. There are ample supplies of rifles, 
with Garands coming off the production line at better 
than a thousand a day; both light and heavy guns now 
have reached volume production. 

Army warplane production has been stepped up to the 
point where, with Great Britain, we soon will exceed 
the plane output of the Axis countries. More important, 
we will have the plant capacity to increase our production 
to the point where we can seize control of the air in all 
areas of the world struggle. 

The Superiority of Our Planes 

In performance, our Army Air Corps can be credited 
with spectacular progress. We now have four types of 
combat planes better than anything yet produced abroad, 
so far as is known. Details on air speeds cannot be given 
because, with the declaration of war, these became mili¬ 
tary secrets. Our new achievements in performance were 
accomplished not with specially built power units but 
with engines in regular production. This is particularly 
significant because of the promise of improvement 
through the development of more horsepower in still 
larger types. 

American aircraft for some time have been flying in 
the altitude range necessary to modern bombing tactics— 
that is, 30,000 to 40,000 feet. Credit for this goes to a 
supercharger developed by American industry. American 
bomber types now in mass production are superior to 
those built anywhere else in the world. Still better models 
are on the way. 


11 


The manning of these warplanes has required an im¬ 
mense training program for pilots, bombardiers, navi¬ 
gators, gunners, observers, and mechanics. In 1940, fly¬ 
ing officers were being trained at the rate of 7,000 a year. 
For 1941, this was raised to 12,000 a year—and this rate 
was passed in November with the graduation of 1,200 
aviation cadets. 

At present, the Air Forces form the second largest 
branch of the Army. Current plans for 1942 call for the 
addition of 20,000 aviation cadets per month. By mid¬ 
year, Air Force strength will have passed the 750,000 
mark, and will be expanding rapidly. 

Through wide revisions in the requirements, approxi¬ 
mately 2,000,000 more men are expected to become eli¬ 
gible for the Air Forces. 

At the beginning of the war in September 1939 we did 
not possess a munitions industry of any great significance. 
We had to build one. Nearly a billion dollars’ worth of 
new munitions plants are now in full operation. Several 
billions’ worth of additional munitions plants are on their 
way to completion. Among the 23 new munitions plants 
already in operation are some of the largest of their kind 
in the world. 

The billions already spent in building tank arsenals 
and powder plants, small cities of cantonments, hospitals, 
and storage depots will be matched by more billions as 
our Army grows. 

The Goal: Soldiers 

In the maneuvers of 1941 and in the battles in the Far 
East the officers and men of the United States Army have 
measured up to our traditions of soldiering. 

Into the immense frame of our new Army fit the thou¬ 
sands upon thousands of American soldiers who were 
civilians a short time ago—the Wyoming cowpuncher who 
is now a pilot in the Air Corps and the Hartford insur¬ 
ance salesman who is now a buck private in the Infantry; 


12 



the brakeman on the Northern Pacific who used to work 
out of St. Paul; the student; the school teacher; the clerk; 
the man who ran a newspaper stand in New Orleans; 
young men from Maine and California and the Mississippi 
Valley. Yesterday comparatively few American families 
were represented in the Army. Tomorrow there will be 
comparatively few that are not. 

More than half the present Army is made up of men 
chosen through the Selective Service System. Up to De¬ 
cember 7, 1941, the Selective Service System had regis¬ 
tered 17,672.000 men between the inclusive ages of 21 and 
35, and around 925,000 had been inducted into the Army. 

A wave of voluntary enlistments was one answer to the 
wave of Japanese planes over Pearl Harbor. To insure 
the fullest possible supply without taking essential men 
from the assembly lines and the forges, from the shipyards 
and the munitions plants, the Selective Service Act was 
amended. The amendment expands the age brackets for 
military service to include 20-year-olds through 44-year- 
olds. All men from 18 to 64, inclusive, are required to 
register for all kinds of war work. With the new law, 
the United States will be able to recruit an Army esti¬ 
mated at 7,000,000 men. 

The Army has come an astoundingly long way since 18 
months ago. Then, as General Marshall said, “Each divi¬ 
sion constituted a force which, when concentrated 3 or 4 
months later, would permit one regiment to train—if all 
the other troops of the division stayed in camp and loaned 
their transportation to that one regiment.’’ 

The Future Ss the Pt'e&ent 

Today, the Army is encamped all along our seaboard, 
far inland, at our overseas bases, and in the Canal Zone. 
Our Air Force can strike from the mainland and from 
our overseas bases against invaders of our country or 
South America. Teams of air and mechanized forces 
have shown in maneuvers that they can work together 
effectively. 


13 



Yet, as Secretary Stimson said just before the Axis 
struck: “In the light of present world conditions the 
Army which we are now training is far from large. Our 
total military forces amount only to a slightly larger num¬ 
ber of soldiers than were contained in the armies of 
Belgium and Holland at the time when they were over¬ 
thrown in a few days by the might of Germany. We 
are trying to arm them with weapons of a better quality 
than those in the hands of any other soldiers in the 
world, and we are trying to fit them to be not only the 
equal of any such soldiers but to serve as the leaders and 
teachers of the large forces which the future may show 
it is necessary for us to raise. ’ ? 

That future has now become the immediate present. 


i 


14 


THE JOINT EFFORT 

Our Unique War Weapon 

The sun never sets on the men and materials of the 
Lend-Lease Act, passed by Congress a scant 10 months 
ago. It is a unique war weapon. The men who fight or 
labor under the banners of lend-lease range from young 
British pilots, trained in the United States, to steam- 
shovel men at work on bases in the cold and fog of 
Northern Ireland. The materials vary from vitamins 
for the babies of besieged England to bombers and tanks. 

The theater of lend-lease is the world itself. Thirty- 
three governments, in addition to the British Empire, 
are eligible for benefits. The United States, with roughly 
7 percent of the world’s area and population, has pledged 
itself to become the arsenal of democracy for 72 percent 
of the world’s area and for 64 percent of its peoples. To 
this end almost $13,000,000,000 has been appropriated. 

Does the Axis plan a push eastward? We are prepar¬ 
ing for such a thrust. Out of lend-lease funds, British 
bases are being built at Rangoon in Burma, at Karachi on 
the Arabian Sea, and other vital outposts on the Persian 
Gulf and in Eritrea. With $50,000,000 from lend-lease, 
the Army Air Corps Ferrying Command has delivered 
more than one thousand planes, in the main bought with 
British funds. Pan American Airways has received a 
subsidy for a new route across the South Atlantic. An¬ 
other lend-lease air line reaches to Iceland. Trucks sup¬ 
plied with lend-lease fuel and oil careen over the crazy 
twists of the Burma Road, China’s main life line. The 
United States Public Health Service is battling malaria 
among the 250,000 Chinese laborers who are building a 
railroad, paralleling the Burma Road. 

3 


438051°—42 


15 



Tlie “relatively small trickle' 7 of assistance—so it was 
described last September—can hardly be called a river 
even now. But it is a stream and it is growing fast. 
Last March only $18,000,000 in lend-lease aid were given. 
By November 1941 this swelled to $283,000,000 a month. 
A grand total of 1.2 billion dollars has been spent, which 
is some 10 percent of all we have spent for defense and 
war since the Lend-Lease Act was passed. 

The stream must become a river, a torrent, and then 
a flood. Training British pilots, guarding the health of 
those who labor on the Burma Road, repairing war and 
merchant vessels—all must continue and be augmented. 
Planes, tanks, guns, ammunition, and food must flow in 
even greater quantities to Russia, the Dutch East Indies, 
Australia, Burma, China, Africa, the Middle East, the 
British Isles, and South America. 

The story of lend-lease goes back to the collapse of 
Europe. France had been buying here. Great Britain, 
to a much greater extent, had been exchanging her credits 
in this country for munitions and other supplies. The 
spring of 1940 brought disaster. An invasion of England 
seemed certain. We did not wait upon technicalities. 
The British received all the guns, munitions, and other 
supplies which we could spare. The guns were of World 
War vintage and their value had been written down from 
300 million to 43 million dollars. Yet they might well 
have saved the British Isles had England been invaded. 

That summer the American people awoke to their own 
danger and the first of the defense billions was provided. 
Our policy was defined by the President—defense of the 
Western Hemisphere; continued and increasing aid to 
Great Britain; the freedom of the seas; denial of appease¬ 
ment to Hitler. 

M. R. 177& 

By now it was a joint effort. The winter and early 
spring of 1940-41 made it apparent that the joint effort 
would fail unless the hands of Britain were upheld. The 


16 






British, who had continued to buy their necessities of 
war, were running out of dollars. Ships were being sunk 
in the Atlantic at the rate of 5,000,000 tons a year. On 
January 10, 1941, a bill with the historic number, 1776, 
was introduced in the House of Representatives. This 
was the Lend-Lease Act. It was followed by an appro¬ 
priation of $7,000,000,000. Seven months later a second 
appropriation of nearly $6,000,000,000 was approved. 

It was relatively easy to appropriate the billions; it was 
infinitely more difficult to transform the dollars into 
weapons or services or food—and, finally, to get them on 
ships en route to their destinations of desperate need. 
No Government agency existed to do the work. Our 
industrial productive system was already jammed. The 
shortage of ships grew hourly more grave as the sinkings 
continued. 

The first organization created by Executive order was 
the Division of Defense Aid Reports. Subsequently, the 
Division’s name was changed to the Office of Lend-Lease 
Administration. A clearing house for requests for aid 
from the nations which are fighting the fight of the 
democracies, the Lend-Lease Administration buys nothing, 
produces nothing, delivers nothing. The purchasing, pro¬ 
ducing, and delivering are done by the War and Navy 
Departments, the Department of Agriculture, the Treas¬ 
ury Department, and the Maritime Commission. The 
State Department makes the agreements whereby nations 
receiving assistance clearly understand their rights and 
obligations. The Board of Economic Warfare is con¬ 
sulted, as is the Office of Production Management. Final 
determination of the countries to be assisted rests with the 
President. 

Actual exports sent abroad thus far hardly exceed $600,- 
000,000. The balance of the 1.2 billion dollars already 
spent went for services rendered, for air and other train¬ 
ing programs in the United States, for the repair of ships, 
the construction of munitions plants. Future exports will 
be gigantic when we achieve all-out war production. 


17 


Lend-Lease in the Air 


Of the total of 2.8 billion dollars appropriated for avia¬ 
tion, 2.7 billions already have been earmarked, and con¬ 
tracts up to 1.8 billions have been let. Few of these 
airplanes have been shipped abroad as yet, but they are 
beginning to come off the assembly lines. 

Other aerial warfare activities financed by Lend-Lease 
include the Army Air Corps Ferrying Command, new air 
lines across the South Atlantic and from West Africa to 
Egypt, new airports, the training of thousands of British 
pilots. 

For lend-lease ships and shipping, nearly $2,000,000,000 
has been authorized. On our East and West coasts, on 
the Gulf of Mexico, and on the Great Lakes 26 shipyards 
are turning out lend-lease ships. Existing yards are 
being enlarged and new ones built. 

Sailors of British war vessels and merchant ships have 
been fed and housed here while their ships were being 
repaired. 

Lend-lease appropriations for war on the land total 
almost $5,000,000,000. This will go for ordnance, for 
tanks, for miscellaneous military supplies, and for ex¬ 
panding production facilities in the United States. All 
this is aside from supplying food. 

To Great Britain have gone guns, tanks, medical sup¬ 
plies, raw materials, and machine tools. These necessities 
are to go also to Australia, New Zealand, India, and 
South Africa. Several hundred American tanks have 
already been in combat in the North African campaign. 

Aid to China is far from adequate. But heavy ma¬ 
chinery of various kinds has been sent. Materials for 
the new railroad along the Burma Road have been sup¬ 
plied ; also arms and ammunition. 

Russia is promised $1,000,000,000 in lend-lease assist¬ 
ance by June. American material has been going to 
Russia since July, paid for by Russia and not under lend- 
lease. Lend-lease shipments, still far from large enough, 

18 


are expected to be stepped up rapidly. This will include 
large quantities of oil and gasoline. 

Lend-Lease Food 

The millionth ton of American food has safely arrived 
in England. This has defeated Hitler in his attempt, 
through submarines and aircraft, to starve England into 
submission. For a time this was a real threat. As long 
as present shipments are maintained, Hitler will never 
starve England. More than that, with fuller rations, 
British workers will be able to increase their production 
of munitions. 

Food for England was a primary objective of the Lend- 
Lease Act and is one of the most successful parts of the 
entire program. Over half a billion pounds of meat and 
fish products had been provided by the end of November 
1941, in addition to hundreds of millions of pounds of 
sugar, eggs, milk, fruits, vegetables, cereals, and grains. 
We have undertaken to do much more. By the middle 
of 1942 we will have supplied these totals: dairy products 
equivalent to 5.6 billion pounds of milk; meat and lard 
from 9,000,000 hogs; eggs from 40,000,000 hens; 45,000,000 
pounds of chicken—among other items. As a whole, food 
shipments will represent 6 or 7 percent of our total farm 
production. Weather permitting, production of those 
foods most needed for human health will be greater than 
ever in our history. 

No touch of altruism lies in the lend-lease program. 
We have been sending supplies to the nations which have 
fought a delaying action while we were getting prepared. 
In exchange for lend-lease aid, American airfields have 
been permitted in British territory in Africa; from all 
over the world we are getting vital supplies of essential 
war materials—chromite, asbestos, platinum, tung oil, 
tin, tungsten. 

The purpose of the Lend-Lease Act is military. It is 
a war weapon. Methods of repayment have been left 


19 



until after the war. The law says, “the benefit to the 
United States may be payment or repayment in kind 
or in property, or any other direct or indirect benefit 
which the President deems satisfactory/’ 

The first benefit is to be the defeat of the Axis. 


20 


THE BATTLE OF ECONOMIES 

The Silent War 

While our sea, land, and air fighters are meeting the 
Axis throughout the world, action has been joined on 
still another front. This silent and stubborn battle may 
well be the most decisive of all. It is the battle of 
economies. It is a war of commerce and shipping, of 
barter and buying, of loans and agreements, of blacklist 
and blockade. It is starvation for our enemies and food 
for our friends. 

The term “economic warfare/’ with all its exciting, 
if vague, connotations, has become familiar to the average 
citizen in recent months. Just what does it mean? It 
means fighting the Messersclimitt before it is a Messer- 
schmitt, fighting the tank before it is a tank, smashing 
the submarine before it can go to sea. It means prevent¬ 
ing the manufacture of Axis weapons of war by prevent¬ 
ing the Axis from getting raw materials. It means get¬ 
ting raw materials for our own production. 

In the days of the Napoleonic wars, indeed of our own 
Civil War, the technical equipment of armies was rela¬ 
tively modest, and a belligerent nation could furnish its 
own metal and supply. To prosecute war successfully 
today—to build planes, ships, armaments—raw materials 
must be brought from every corner of the earth. 

The production of the tools of war is an endless ad¬ 
venture into chemistry and metallurgy. Armor plate for 
battleships and tanks requires not only steel but manga¬ 
nese, nickel, chromite, tungsten, and vanadium—coming 
from Latin America, Canada, Turkey, Africa, and China. 
Armor-piercing bullets and high-speed tools depend upon 


21 



tungsten that comes from China, Bolivia, and the Argen¬ 
tine. Platinum is needed in the manufacture of smoke¬ 
less powder. Platinum comes from Colombia, Canada, 
South Africa, and the Soviet Union. South America’s 
bauxite becomes aluminum for airplanes. 

For more than 18 months a host of Government agen¬ 
cies, each working in its own specialized field, has been 
laying the battle lines to see that we get these necessities, 
and that the Axis doesn’t. 

The Pre-War Enemy Attack 

One of our most important moves in this battle of 
economies has been to counter the enemy’s attacks upon 
us. He has worked for many years to weaken our mili¬ 
tary potential. Through patent controls and cartel agree¬ 
ments he succeeded in limiting American production and 
export of many vital materials. He kept the prices of 
these materials up and the output down. He was waging 
war, and he did his work well, decoying important Amer¬ 
ican companies into agreements, the purpose of which they 
did not sense. Our businessmen were peaceful traders. 
The enemy’s businessmen were and are, all over the world, 
agents of aggression. 

The list of materials affected is long—beryllium, optical 
instruments, magnesium, tungsten carbide, pharmaceu¬ 
ticals, hormones, dyes, and many more. When you match 
each product with its military use, the significance of the 
attack becomes clear. Beryllium is a vital element for 
alloys that make shell springs; magnesium makes air¬ 
planes and incendiary bombs; tungsten carbide is essential 
for precision machine tools. 

Concealed behind dummy corporations, the enemy went 
unchecked for years, using our own legal machinery to 
hamstring us. In the summer of 1938 our Government 
began to fight back. Investigation, exposure, antitrust 
indictments, and decrees have broken up many of the 
agreements that bound us. Every product listed above is 
now free from restrictions. 


22 



Our Government also has worked to break cartel ar¬ 
rangements under which certain of our products were shut 
off from South America and other markets of the world. 

Foreign Funds Control 

Not all our action on the economic front has been de¬ 
fensive. Since April of 1940 we also have carried the 
economic battle to the enemy. 

More than $7,000,000,000 of assets of 33 foreign coun¬ 
tries have been frozen in the United States. Such action 
automatically severs normal economic relations between 
the United States and these countries. 

Foreign funds control helps our friends and harms our 
enemies. When Germany invaded Denmark and Norway, 
the President, by Executive order, froze Danish and Nor¬ 
wegian assets in this country. Thus, the assets of these 
countries are prevented from falling into Axis hands. 
As other nations were invaded or dominated, the control 
was extended successively to the Netherlands, Belgium, 
France, and the Balkan States. 

In June 1941 the assets of Germany, Italy, and their 
satellites were frozen and, shortly afterward, the assets of 
Japan. The control now embraces all of continental 
Europe except Turkey. After the fall of Manila the 
assets of the Philippines were frozen to thwart the 
Japanese. Blocked assets include bank deposits, ear¬ 
marked gold, securities, merchandise, patents, business 
enterprises, and other forms of property. 

These things, in themselves, are the tools of economic 
warfare. The freezing of assets paralyzed German and 
Italian efforts to acquire vital and strategic materials in 
the Western Hemisphere. The Axis was using American 
dollars and American banking facilities to underwrite 
sabotage, spying, and a propaganda campaign in both 
North and South America. The blocking of Axis assets 
abruptly choked this poisonous stream. 

Against Japan, the blow was even more telling. Japan’s 
economy is heavily dependent on imports. So is her war 


438051°—42 


4 


23 




machine. Japan’s purchases of mercury—vital in certain 
explosives—increased 240 times in 1940 over the amounts 
acquired in 1938. Her purchases of zinc increased 60 
times. In a 2^/2-year period she bought 4,350,000 tons of 
scrap iron and steel here. This accumulation of stocks 
for the war that is now a reality ended on July 26 when 
the United States, Great Britain, and the Dutch simul¬ 
taneously applied freezing control. 

Approximately 2,500 business enterprises with varying 
degrees of foreign domination now are operating under 
licenses granted by the Foreign Funds Control. Each 
firm is required to file an affidavit giving the organization 
of the corporation, officers and directors, nature of oper¬ 
ations, and its principal customers. Periodic reports must 
also be filed. As a result of this, plus the first compre¬ 
hensive census ever made of foreign-held property in the 
United States, the Treasury Department now has in its 
files strategic information on the structure, activities, and 
background of Axis-owned and Axis-dominated concerns. 

All security accounts of foreigners have been frozen. 
The unlicensed importation of securities from any foreign 
country has been prohibited. This struck against the 
Axis, which has attempted to dump into the American 
market a wealth of securities looted from fallen countries. 

The Blacklist 

Another powerful weapon in fighting Axis influence has 
been the Blacklist or, to give it its legal name, the Pro¬ 
claimed List of Certain Blocked Nationals. First used 
against Axis agents in this hemisphere, the Blacklist has 
now been extended to cover the neutral nations of Europe. 

The Blacklist is in effect a roll call of individuals and 
firms with which Americans must not trade. There are 
now approximately 5,600 names on the list. They rep¬ 
resent billions in Axis investment. In one small Central 
American country alone German firms did an annual 
business of between $75,000,000 and $100,000,000. 


24 




The names on the Blacklist—a Who’s Who of Axis 
undercover agents and their dummies—represent months 
of investigation and intelligence work by the Office of the 
Coordinator of Inter-American Affairs, the Department 
of Justice, Treasury, the Department of Commerce, and 
the State Department ’s diplomatic missions in the various 
countries. 

Particular effort has been made to prevent dislocation 
of the economy of the democracies of the Americas, as a 
result of the eradication of Axis influences. Guatemala 
is an example. Germans there owned 50 percent of the 
coffee industry. To have barred this German-grown 
coffee from the United States would have created a 
desperate financial crisis in Guatemala. Treasury and 
State Department representatives arranged for the Guate¬ 
malan Government to take over the coffee crop and clear 
it to this country through a central bank in Guatemala 

City - 

The Blacklist has effectively ended, except for small 
quantity smuggling, all direct trade with Axis firms. The 
problem now is to deal with firms serving as cloaks for 
enemy trading. The profits from dealing in contraband 
are enormous. Some companies have been offered as 
much as 75 percent of the value of an export cargo merely 
for the use of their names as the shippers. 

It is now accurate to say that Hitler and his partners 
will find no further economic aid or comfort in the 
republics of the Americas. 

Other Weapons 

Directing our campaign in this battle of trade, the 
Board of Economic Warfare aids the military in the 
establishment of blockades. It also is empowered to con¬ 
trol exports under a licensing system and to requisition 
and seize commodities whose export is forbidden under 
emergency laws. 

Recently 590,000 pounds of tin plate were seized in a 
New York warehouse. Purchased a year ago and kept 


25 



in storage, the tin plate was consigned to an industrial 
concern in a nation now dominated by the Axis. Thou¬ 
sands of tons of aluminum and iron and steel products 
originally billed for similar destinations have been found 
in warehouses and in railroad yards. The Government 
is taking over and using these goods. 

Control of exports and the Blacklist are inseparable. 
The shipment of many non vital commodities to South 
America and the British Empire is freely permitted under 
so-called general licenses, but such licenses are not granted 
until the Blacklist has been consulted. Issuing of licenses 
has been greatly speeded so that legitimate industry does 
not suffer. Some 3,000 applications are being handled a 
day. In most instances a decision is made within 2 days. 

The elimination of Axis-controlled air lines in South 
America is another excellent example of successful eco¬ 
nomic warfare. The shipment of high-octane gasoline to 
suspect companies was cut off. Most of the Republics 
wanted to buy out foreign owners but lacked the means. 
An 8-million-dollar lending fund was set up to facilitate 
these purchases. In September of 1939 there were 4,109 
miles of Axis-dominated lines in Bolivia; now there are 
none. There were 5,494 miles in Colombia, 594 miles in 
Ecuador, 1,210 miles in Peru. Now there are none. The 
job is virtually complete in other countries. 

Not content to block the export of products from the 
United States to the Axis, we have worked to prevent the 
Axis from getting strategic materials from any country. 
We have contracted for the purchase of materials which 
might otherwise be sold to enemy agents. 

Before the end of 1940 agreements had been signed 
which assured us substantially the entire copper produc¬ 
tion of Chile, Mexico, and Peru. In November 1940, we 
agreed to buy almost all Bolivian tin not earmarked for 
Great Britain. A few months later, in the face of higher 
Japanese bids, an agreement was made to purchase 
Bolivia’s entire tungsten output. Under the 1941 agree¬ 
ments with Brazil, Mexico, and Peru, we are taking the 

26 


entire exportable surplus of almost all their strategic ma¬ 
terials. We have made similar arrangements for the 
control of Colombian platinum and Cuban sugar. 

Supplying a Hemisphere 

Choking off the enemy’s sources of materials fitted 
naturally into our broader efforts to obtain our own 
stocks. The Government’s stock-piling program—to build 
up reserves of imported war materials which might be cut 
off in time of war—began in the summer of 1939, but 
feebly. It was stepped up after the fall of France. 
These reserves will continue to be bolstered, but their 
exact size will be kept secret. As users of tires and golf 
balls are now aware, supplies of some materials are not 
sufficient to meet both our fighting needs and our civilian 
desires. 

Special studies have uncovered processes for treating 
low-grade domestic ores, providing new sources of stra¬ 
tegic metals. Agriculture research men are working to 
develop substitutes for materials which we have imported 
from the Far East. New uses have been found for some 
of our own most common products. 

In the case of rubber, we are supplementing our stock 
pile by building synthetic rubber plants, by increasing the 
reclaiming of rubber, by stimulating rubber production in 
South America, and by preparing the way for increased 
production of guayule rubber, which comes from a shrub 
we can grow in our own Southwest. 

Our dependence on the democracies of the Americas 
for strategic materials carries with it an obligation to 
send in return the manufactured goods they can get 
nowhere else. It is a part of our economic policy to con¬ 
tinue sufficient exports to our neighbors to satisfy their 
minimum essential requirements, treating their civilian 
needs as we would our own. Special consideration has 
been given to supply them with machinery needed for 
their part in the productive effort. We have granted 
export licenses for tin plate to maintain the canning 


27 




industry of South America. We have given high priority 
ratings for railroad equipment to Brazil. 

The allocation of supplies is worked out, so far as 
possible, in cooperation with the other American Gov¬ 
ernments. 

To aid in the financing of these purchases and to 
develop new, untouched resources the Export-Import 
Bank has granted loans and credits to eighteen American 
republics. For example, credit was extended to Brazil 
for the erection of a steel plant. Costa Rica, Ecuador, 
Nicaragua, El Salvador, and Panama have received loans 
for highway improvements; Haiti for rubber production. 
Outstanding loans and undisbursed commitments now total 
approximately $290,000,000. 

Beyond today’s objective, to defeat the Axis in the war, 
lies the peace of tomorrow. The economic highways we 
have pioneered in war will still be there. If we- have 
pioneered well, the blows struck in economic warfare will 
be blows struck for our future freedom and prosperity, 
and the freedom and prosperity of all friendly nations, 
large and small, everywhere. 


28 


SHIPS FOR THE WORK OF WAR 

The Globe is Our Battlefield 

A major objective of our war program is the building 
of a merchant shipping fleet on an unprecedented scale. 
The war has spread over all the continents and all the 
oceans. The whole planet has become a battlefield. Tre¬ 
mendous quantities of supplies must be sent across un¬ 
counted leagues of water. Our ships must take them 
across the Atlantic to Britain, across the Pacific to Russia, 
India, and Burma, north to the Arctic ports, and south 
into the Tropics. 

Our supply lines must reach from our own industrial 
arsenals over the seas to fighting fronts of the whole 
world. The Maritime Commission is now launching ships 
at the rate of 1 every 24 hours. In the next 6 months, 
or before, it expects to be launching 2 a day. Present 
schedules call for the building of about 2,000 oceangoing 
vessels. Eighteen hundred of these are to be ready by 
the end of 1943, in accordance with the expanded schedules 
announced by the President. 

Today ? s program dwarfs our First World War building 
of the bridge of wooden ships. At the time of the armis¬ 
tice peak employment in American shipyards was about 
350,000 men. We had at least equaled and possibly ex¬ 
ceeded that total before our entry into this war. At least 
750,000 men will be at work building ships in America for 
ourselves and other nations fighting the Axis when the 
present program is in full operation. New methods of 
prefabrication and welding have drastically cut the time 
it takes to build ships. 


29 


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Up to the beginning of December 1941 contracts had 
been signed for 999 ships; keels for 272 had been laid; 154 
had been launched—and 123 of these had been delivered 
and sent into active service. 

According to the schedule set before President Roose¬ 
velt ordered further increases in 1942 and 1943 produc¬ 
tion, 79 new merchant ships were to be launched in the 
first quarter of this year, 131 in the second quarter, 167 in 
the third, and 140 in the fourth. For the first quarter of 
1943 those plans called for 154 vessels, 166 in the second 
quarter, 158 in the third, and 173 in the fourth. Those 
figures are now being revised upward to meet the goals 
set by the President. 

With the Navy also carrying out the greatest program 
for building fighting ships in our history, the capacity 
of our existing yards was long ago exceeded. To meet the 
demand, the Maritime Commission has ordered 131 new 
shipways. More than 95 percent of them are already in 
use and the rest are to be in production in the next 2 
months. Shipyard facilities have increased since the 
Commission began its program in 1937 from 10 yards with 
46 shipways capable of turning out vessels 400 feet or 
more in length, to 40 yards with 275 ways, capable of 
this work. Twenty-nine of these yards—with 202 ways— 
are devoted to building oceangoing merchantmen. The 
40 yards are strategically located along our Atlantic, 
Gulf, and Pacific coasts to take the fullest advantage of 
existing facilities, labor supply, and industrial production. 
Other yards and plants, many of them on the Great Lakes, 
are launching a great many smaller craft of importance to 
war work, such as coastal tankers, coastal cargo boats, 
barges, seagoing and harbor tugs, and the long carriers 
that carry ore down the Great Lakes. 

The Shipway Assembly Line 

Speeding up of the present huge construction program 
depends primarily on labor, materials, and equipment. 


32 




The principal shortage of equipment is in propulsion 
machinery—engines to make the boats go. 

A wide distribution of work among available manu¬ 
facturing concerns, large and small, was devised when the 
construction program first got under way. The Commis¬ 
sion reports that the shipbuilders of America have applied 
their ingenuity to the development of new techniques to 
the end that a shipway shall become, as nearly as possible, 
an assembly line. 

After the Nazis got control of Europe’s continental 
coast from Norway to Spain, a shortage of ships to meet 
our commercial needs and our promised aid to Britain 
soon developed. As the fighting areas spread over the 
earth, the shortage was aggravated. Since the beginning 
of the war, the Commission has permitted the transfer of 
227 ships—vessels of 1,000 gross tons and over—to foreign 
flags. These ships total approximately 1,100,000 gross 
tons. They consisted of vessels considered obsolete from 
an economic standpoint. Many had not been in use for 
several years. 

Another 200 vessels, totaling about 1,500,000 gross tons, 
have been transferred to Army and Navy use since the 
fall of 1939. 

Moreover, the President directed the Commission in. 
April 1941 to assemble a pool of 2,000,000 tons of shipping 
to be allotted to the nations resisting aggression. 

All these transfers and allocations account for more 
than 4,000,000 gross tons of shipping, 50 percent of the 
8,000,000 tons of oceangoing merchant shipping available 
to this country when we went to war. 

Meantime, while the ships were being transferred or 
allocated, the volume of goods to be transported grew. 
In 1938, our sea-borne foreign trade called for the trans¬ 
portation of 75,000,000 cargo tons. American ships moved 
about 26 percent of this trade. Now, preliminary esti¬ 
mates indicate that the total movement of our exports and 
imports for 1941 exceeded 80,000,000 cargo tons—and that 


33 






American ships accounted for 33 percent of this movement. 

Under the Ship Warrants Act, approved last July, the 
Commission is authorized to prescribe conditions as to 
ship operations and, in that way, to enforce priorities in 
all merchant shipping entering American ports. Britain 
has a similar system—so that our two nations, between 
them, can exercise control over the operations of virtually 
all the world’s merchant shipping not under the fist of 
the Axis. 

To date, the Commission and our armed forces have 
acquired the services of 100 foreign vessels, aggregating 
more than 550,000 gross tons, which had been immobilized 
in American ports. Other American republics have 
similarly taken over 72 ships amounting to more than 
360,000 gross tons. These actions have helped alleviate 
the shortage of ships. 

The Search for Seamen 

The problem of getting officers and crews for all these 
ships is considerable. About 40,000 seamen of all ratings 
and 10,000 officers now are serving on 1,200 boats engaged 
in deep-sea trade. With a program calling for more 
than double this number of ships by the end of next year, 
at least another 40,000 seamen and 10,000 officers will be 
needed. Some of the new ships will carry Army and 
Navy personnel. Some may sail under friendly foreign 
flags with foreign crews. 

The Commission is assuming that crews will have to be 
found for at least 800 ships. On the average, a merchant 
vessel requires 35 seamen and 8 officers. Eight hundred 
new ships would call for 28,000 seamen and 6,400 officers. 
Some can be recruited from among seamen who have 
retired or who have found better paying jobs ashore. 
The Commission is now planning to train at least 25,000 
new seamen and 6,300 officers in the next 2 years. 

The training-ship fleet has been increased from 10 to 18 
vessels. Unlicensed personnel, including apprentice sea- 


34 


men, are being trained at shore stations; licensed officers 
at stations aboard merchant ships, and at four State ma¬ 
rine academies. 

At two stations training in gunnery is being given to 
new seamen and officers. This will be extended to other 
stations and training ships as soon as ordnance now on 
order is received from the Navy. The men in our new 
merchant fleet are going to be armed and trained to pro¬ 
tect the cargoes they deliver. 


35 


THE LABOR FRONT 

i6 Spontaneous Cooperation of a Free People 99 

On the world’s labor front the contrast between the 
Fascist system and our own is sharply and dramatically 
drawn. The first conquest of the Nazis was the conquest 
of their own people. As a consequence, many Reich fac¬ 
tories that are turning out guns meant for the enslavement 
of other people are themselves run by slaves. And work¬ 
ers of countries overrun by the Axis have been wrenched 
from their homes and shipped into the Reich as forced 
labor. 

In this country we have placed our reliance on what 
President Wilson called, “the highest and best form of 
efficiency * * * the spontaneous cooperation of a free 

people.” 

We are fighting our battle of production confident that 
free labor will outproduce slave labor. 

Five million workers have already been drawn into 
America’s tremendous war-production program. But that 
is only a beginning. Five million more will be required 
in the next 6 months. By the end of the year labor’s 
army of men and women in war industries will be 
tripled—and it will be quadrupled in 1943. 

During the first year and a half of our defense program 
disputes between labor and management were allowed to 
interfere with production. From June 1, 1940, to De¬ 
cember 1, 1941, O. P. M.’s Labor Division tallied 160 de¬ 
fense strikes of “primary significance,” involving 280,100 
workers, causing the loss of 2,667,900 man-days. On 
March 19, 1941, the National Defense Mediation Board 
was created by Executive order to mediate labor contro- 


36 


versies and avoid strikes, stoppages, and lock-outs. In 
roughly 10 months of its existence, 114 cases, affecting 
nearly 2,000,000 workers, were certified to the Board. In 
61 of these cases strikes were in progress and defense pro¬ 
duction interrupted when the Board was called in. 
Ninety-two disputes, affecting more than 1,000,000 work¬ 
ers, were settled. 

One of the Board’s major objectives was to keep work¬ 
ers on the job while controversies were being mediated. 
Progress in attaining this objective is shown by the fact 
that in the 22 cases still pending before the Board early 
in January, the 98,000 workers affected remained at work 
in the factories. 

Other conciliation agencies of the Government settled 
583 disputes in plants working on Army, Navy, and 
Maritime Commission contracts before they could de¬ 
velop into strikes. These disputes involved more than 
2,000,000 workers. 

The recommendations of the Mediation Board had no 
legal force but they rarely were disregarded. In three 
cases, when strikes were in progress and the Board’s 
recommendations were rejected, the President ordered 
seizure of the plants. 

Japan’s attack on Pearl Harbor brought a swift and 
almost unanimous response from labor. Threatened 
strikes were called off. Unions circularized their mem¬ 
bers urging them to buy defense bonds. Others asked to 
be allowed to give blood for Army and Navy blood 
banks. Unions, whose membership was largely Italian- 
American and German-American, affirmed that “we are 
Americans above all.” 

The President’s appeal to all war industries to work 168 
hours a week produced pledges of support. Hundreds of 
thousands of workers volunteered for overtime until the 
additional Sunday and night work could be spread out 
through the recruiting of additional shifts. 

This spontaneous rallying of labor reached a climax on 
December 17 when representatives of the C. I. O. and 


37 


A. F. of L. met with representatives of industry to draft 
voluntarily a formula to insure industrial peace and 
prevent interruptions in production. This conference 
reached a unanimous agreement on a three-point formula 
which was immediately adopted by the President: 

1. There shall be no strikes or lock-outs. 

2. All disputes shall be settled by peaceful means. 

3. The President shall set up a proper War Labor 
Board to handle these disputes. 

On January 12, the President created the War Labor 
Board, superseding the National Defense Mediation 
Board. The new Board consists of 12 members, with rep¬ 
resentatives for the public, for labor, and for manage¬ 
ment. In the maritime field, labor and management repre¬ 
sentatives agreed unanimously on the creation of a similar 
Maritime Labor Board to settle all disputes. The United 
States Maritime Commission said this agreement assures 
uninterrupted shipping service for the length of the war. 

Ten Million Worhers Need Apply 

War industries are expected to need another 10,000,000 
workers before the end of 1942. Shortages of some skills 
cannot be avoided. However, great as are our labor needs, 
they can be filled from the vast reservoir of manpower 
that lies in our population of 133,000,000. Where in 1918 
only 286 men and 266 women in every thousand were of 
normal working age, today in every thousand we have 296 
men and 293 women of working age. 

We are prepared to tap this vast reservoir of man¬ 
power. When industry began tooling up for defense 
the W. P. A. estimated the number of unemployed at 
9,000,000. About 5,200,000 now have been absorbed. It 
is expected that one-half of those still unemployed will 
be at work before next December. 

Since the early summer of 1940 the greatest worker 
training program we have ever known has been under 
way. Nearly 2,500,000 workers have received training in 


38 


1,200 vocational schools, 155 colleges and universities, and 
in 10,000 public school shops. More than 600 schools are 
operating on a 24-hour basis. In addition, several hun¬ 
dred thousand youths have been given work experience 
and defense training under N. Y. A. and C. C. C. Work¬ 
ers in 1,800 plants have been reached by training within 
industry itself. 

To offset the serious shortage of “lead men,” particular 
emphasis has been laid on the training of foremen and 
supervisors. Since August about 12,000 supervisors have 
been trained in 700 plants. The goal is to turn out 
350,000 such supervisors, 200,000 of them in the next 6 
months. 

For some skills, 3 to 4 years are required to train 
workers. The emergency demands short-cuts. They 
have been found in such devices as “up-grading,” by 
which workers are moved up through the higher skills 
within a plant and new workers are hired to fill their 
places. One aircraft factory was able to expand its labor 
force from 1,200 to 7,500 in a few months. Employees 
who had done nothing more complicated than handle a 
wheelbarrow were “upgraded” to semitechnical opera¬ 
tions on the assembly line. 

Labor unions in the skilled and semiskilled trades have 
been searching out former members from the stores and 
filling stations to which they went during the depression. 
A more intensified recruiting of such workers will be 
launched immediately after the new draft registration. 

The 1,500 State employment offices scattered throughout 
the country are being centralized under the United States 
Employment Service. The Employment Service will op¬ 
erate on the basis of regional labor markets and clear 
requests without regard to State boundaries. 

Help Wanted on the Farm 

The Employment Service, too, is trying to place every 
available farm worker. With record crops in prospect, 


39 


an acute shortage of agricultural labor threatens. Farm¬ 
ers on family-sized farms have been unable to pay wages 
high enough to compete with industry. Hundreds of 
thousands of young farmers are going into the armed 
forces. To fight this shortage, farm families, women and 
children as well as men, will have to work longer and 
harder. City youths probably will be organized to go out 
to the farms for seasonal jobs. A woman’s “land army” 
may be recruited. 

Determined to end raiding, 0. P. M.’s Labor Division 
has been arranging industry-wide agreements between 
workers and employers, stabilizing rates of pay in plants 
doing similar work. Agreements already have been 
worked out in the shipbuilding, aviation, and construction 
industries. Without such agreements, shipyards, aircraft 
plants, and construction projects would compete in pay¬ 
ing higher w r ages, the Government would have to pay 
more for munitions, and production schedules would be 
disrupted by needless migrations of workers. 

A Committee on Fair Employment Practice in O. P. M. 
has been working to eliminate color, creed, and nationality 
prejudices in the hiring of workers. Efforts are being 
made to level the barriers against older workers. In the 
railroad industry the age limit for hiring skilled labor has 
been raised from 45 to 51; for unskilled workers, from 45 
to 60. 

Women at the Benches 

Beginnings, too, have been made in the recruiting of 
women for war work. During the last war, nearly one- 
fourth of all the employees in aircraft plants were women. 
Before this war ends, one-third of our aircraft workers 
may be women. In some plants women already are doing 
light sheet-metal work, riveting, welding, spray painting, 
pasting, and gluing. Women have been found particu¬ 
larly adaptable to small-arms ammunition work, and in 
the Frankford Arsenal in Philadelphia nearly 40 percent 


40 


of the employees are women. Other women are making 
gas masks and working as bench hands, solderers, and in¬ 
spectors in arms and munitions factories. It is estimated 
more than 500,000 women now are employed in war work. 
But today only 4 women in every 1,000 are working in war 
industries, while in 1918 there were 21 such workers in 
every 1,000. 

In shipyards, hours of work have been lengthened to 48 
a week, while in some of the critical war industries, such 
as machine tools, overtime has extended the working day 
to 9 and 10 hours. The various labor agencies of the 
Government are keeping tabs to see that this lengthening 
of hours is not pushed to the point where the efficiency 
or morale of labor suffers, or where health and safety 
standards built up during the years are broken down. 

As a further source of labor, several million workers are 
expected to be freed for war jobs as less essential indus¬ 
tries are curtailed. Workers will turn from making 
automobiles to making tanks, from compacts to ammu¬ 
nition, from sewing machines to rifle parts, from fountain 
pens to fuses, from rat traps to camp cots, from pipe 
fittings to hand grenades, from lawn mowers to shrapnel, 
from women’s lingerie to mosquito nets. 

The same process, however, will produce some tempo¬ 
rary unemployment. To minimize hardships, labor de¬ 
fense committees have been established in all industries 
likely to be affected. Labor and management have come 
to agreement on certain basic principles in handling prob¬ 
lems arising out of curtailments. In the rubber industry, 
for example, the program calls for protection of seniority 
rights, transfer of employees from non-war to war jobs 
within plants, preferential hiring of displaced workers, 
recall of workers for war tasks, and retention of seniority 
rights by workers in training for new war jobs. 

Surveys have been made of more than 100 communities 
where serious curtailment of civilian industries seemed 


41 


likely and 15 cities, particularly hard hit by unemploy¬ 
ment, have been certified for special consideration in the 
awarding of war contracts. About $20,000,000 worth of 
contracts have already been placed in these cities. 

Statisticians estimate that our ultimate war effort may 
require 50,000,000 man-years of work. 


42 


THE HOME 



First Things First 

Our plusli days are over. We are no longer the care¬ 
free land of plenty, every counter heaped with chromium- 
coated gadgets, every store bursting with limitless supplies 
of shoes and sealing wax. Total war requires so many 
materials that there is just not enough to go around. The 
production of ammunition requires copper that formerly 
went into ash trays, weatherstripped windows, or toy 
trains. We need the ammunition. We can do without 
the toy trains. 

To see that first things come first is a major task of the 
new War Production Board which supersedes the Supply, 
Priorities and Allocation Board, or S. P. A. B. The new 
Board includes representatives of the agencies formerly 
represented on S. P. A. B.: the Army and Navy, the 
Board of Economic Warfare, the Office of Production 
Management, the Office of Price Administration, the Fed¬ 
eral Loan Agency, and the Lend-Lease Administration. 

Immediately after its creation S. P. A. B. called for 
detailed estimates of all requirements of materials, labor, 
and equipment for the succeeding 18 months. The situa¬ 
tion on strategic materials and tools—including commodi¬ 
ties imported from the Far East, such as rubber, tin, 
antimony, bristles, chrome, mica, and burlap—had been 
carefully studied before the United States entered the 
war. 

Expansion of production was a general policy of S. P. 
A. B., and the Office of Production Management was 
charged with its realization. Since few factories were 
adjusted to war production at the beginning of the effort, 


43 



the job has been tremendous and the perplexities unend¬ 
ing. Existing plants have been expanded and new ones 
built. To this end, the Government and private industry 
had by December 1, 1941, committed themselves to spend 
5.1 billion dollars and 1.2 billions, respectively. 

In September S. P. A. B. approved a program of ex¬ 
panding steel ingot capacity by 10,000,000 tons. Before 
Pearl Harbor, projects for about two-thirds of this pro¬ 
gram had been approved. Since then additional projects 
have been rushed through, virtually filling out the 
10,000,000 tons. Before Pearl Harbor, too, expansion 
programs had been drawn up and, in the main, gotten 
underway to expand our aluminum capacity by 700,000,000 
pounds and magnesium by 350,000,000 pounds a year by 
1943. With a goal of 125,000 airplanes for 1943, both 
these programs will have to be stepped up. 

High priority ratings have been granted to increase 
substantially the production of high-octane (aviation) 
gasoline. 

Production schedules of all munitions and tools have 
been accelerated. Before June 1940 the normal annual 
output of machine tools—without which no airplanes or 
complicated guns, tanks, or combat cars can be built—was 
$150,000,000. This was expanded to $800,000,000 in 1941, 
and should reach 1.2 billion volume in 1942. 

The Contract Distribution Division of O. P. M. is ac¬ 
quainting the small manufacturer with the part he will 
play in the war. The conversion of plants and the draw¬ 
ing of small factories and shops into the war program is 
one of our most difficult problems in switching from a 
peacetime to a wartime economy. It has not yet been 
solved. 

Protecting What We Have 

To insure adequate supplies of scarce materials for war 
purposes, less essential uses of these materials have been 
curtailed. Steel plates and welding pipe for the construc¬ 
tion of petroleum pipe line, for example, were refused. 


44 



Construction projects not vital to the war effort have been 
limited. 

However, ample provision has been made for spare 
parts and replacements so that the life of durable ma¬ 
chinery now in the hands of consumers can be extended. 
With farm equipment, S. P. A. B. reduced the materials 
available for making new equipment by 17 percent, but 
raised the quotas of materials for replacement parts by 
50 percent. 

S. P. A. B. urged conservation of scarce materials and 
the use of substitutes. Wood, glass, porcelain, and enam- 
elware are replacing aluminum in the kitchen. Cotton 
and synthetics are taking the place of silk for stockings 
and of jute for burlap. The possibilities of saving the 
copper and nickel in our coins are being explored. 

The priorities system is our device for carrying out 
“first things first.” To accomplish the major task—get¬ 
ting guns, tanks, and planes to the armed forces—mate¬ 
rials of all kinds have been earmarked for war. 

For some time past all of the Nation’s supply of such 
metals as aluminum, magnesium, copper, nickel, pig iron, 
and steel have been wholly distributed under the control 
of the O. P. M. Many other materials are controlled 
largely by specific orders. The operations of priorities 
have touched directly or indirectly virtually every busi¬ 
ness enterprise and governmental body in the country. 

A system of direct allocations to manufacturers now 
permits a tight control over all our available materials. 
Under the new system, manufacturers will be allotted 
fixed quantities of scarce materials in proportion to their 
production for war and for essential civilian uses. 

To aid our allies fighting the Axis, S. P. A. B. author¬ 
ized shipments of wide steel plates to Canada for use in 
constructing cargo ships. A special United States mis¬ 
sion to Russia brought back a list of Russian require¬ 
ments. S. P. A. B. ordered allocation of the necessary 
materials and immediate shipment. 


45 


During 1941 the United States produced more articles 
for civilian consumption than ever before in its history. 
To strip oft some of this “fat”, production cuts have been, 
ordered for everyday goods like automobiles, radios, ice 
boxes, irons, washing machines, lawn mowers, garden 
rakes, paper containers, fancy galoshes, and juke boxes. 
It has been estimated that $20,000,000,000 of productive 
capacity, based on 1941 operations can be diverted from 
civilian to military life. We face immediate and sweep¬ 
ing curtailment of the less essential civilian products. 

Price Control 

Our eagerness for news from the battle fronts of the 
world must not blind us to the silent, bloodless battle at 
home: the battle of inflation. Inflation ravages a popu¬ 
lation as effectively as bombing from the air. More than 
45 percent of the total cost to the United States of World 
War I resulted from inflation. Should prices continue 
their present upward swing, they will add to the war 
program more than the total cost of the first World 
War. Defense expenditures from July 1940 to December 
1941 including sums appropriated by Congress, loans by 
R. F. C. corporations, and foreign orders totaled 18.4 
billion dollars. Of this, 2.4 billion or 13 percent, repre¬ 
sented excess cost due to inflation. 

Inflationary signs are everywhere apparent. Since the 
outbreak of war, in September 1939, wholesale prices have 
risen 24 percent. Almost two-thirds of this increase has 
taken place within the past 9 months. The cost of living, 
meaning the prices paid by the housewife for food, cloth¬ 
ing, and shelter, has increased 11 percent. Four-fifths 
of this increase has taken place within the past 9 months. 
The cost of living is surging upwards at the rate of 1% 
percent a month and, should it continue unabated, will 
have risen 15 percent by March 1942. An increase of 
15 percent in living costs means that the great mass of 


46 


people will forfeit, to inflation, 1 day’s wage out of 
every 7. 

Inflationary pressures are inevitable during wartime. 
The billions spent on war boom the purchasing power of 
civilians. But the supply of goods that civilians can buy 
fails to keep pace. More money bidding for less goods 
means higher prices all along the line. These price ad¬ 
vances in no way increase the available supply. They 
merely determine who gets the scarce goods. Without 
price controls, the goods go to those with the fattest 
purses. People whose incomes are fixed or low suffer 
harsh reductions in living standards. 

Not only must inflation be prevented so that profiteer¬ 
ing is prevented and the burdens of war are distributed 
equitably; it must be prevented also to avoid social and 
economic prostration after the war. The higher prices 
are allowed to rise now, the farther they must fall after 
the war. 

The Way Ceilings Work 

In the absence of specific price-control legislation, the 
Office of Price Administration has relied on informal, 
persuasive means of control, supported by the emergency 
powers of the President. These controls have taken the 
form of suggestions and warnings, letters freezing prices, 
lists of fair prices, voluntary agreements with individual 
producers, and more formal price ceilings. Ceilings do 
not “fix” or “freeze” prices. Only an upper limit is set, 
below which prices can fluctuate freely. As of December 
20, 1941, 57 ceilings had been invoked. In all, 35 percent 
of the total value of wholesale goods was under control. 

The effectiveness of these ceilings has been proved. 
Since the beginning of the war in September 1939 un¬ 
controlled prices have risen one-third more than controlled 
prices, although the commodities selected for control have 
been in greatest demand. Almost half the field of metals 
and metal products is covered by price ceilings. These 


47 


prices have advanced only 10 percent since the beginning 
of the war. Steel prices, controlled, have remained vir¬ 
tually unchanged since September 1939. In the same 
number of months of World War I, the price of steel 
plates, uncontrolled, rose 210 percent. Pig-iron prices, 
controlled, have risen 15 percent, compared with 53 per¬ 
cent during the first war. Between July 1914 and October 
1916 copper prices rose 113 percent. Today, controlled, 
they have risen 16 percent. During the last war chemical 
prices more than doubled. Now they have risen one-fifth. 

Inflation is being fought along a broad front. Regu¬ 
lations governing installment buying have been tightened 
to require larger down payments and to shorten the 
periods in which to pay. The possible inflationary effects 
of competitive Government buying have been minimized 
through centralized purchasing. Wherever possible, the 
supply of materials and goods has been expanded. 

In some instances, as in copper, lead, wool, and hides, 
this has meant increasing imports. To bring in the pro¬ 
duction of low-cost copper mines, the purchase of this 
copper at a subsidy price above the ceiling was arranged. 
Speculators, who in the past contributed to inflation by 
running wild on the commodity markets, were kept in 
hand by the Commodity Exchange Administration of the 
Department of Agriculture. With the cooperation of the 
exchanges, safeguards such as increased margins on spec¬ 
ulative trading and reducing price fluctuation limits have 
been put into force. 

The Anti-Trust Division of the Department of Justice 
has broken up conspiracies to raise prices. Many high 
food prices, for example, are purely the result of con¬ 
spiracies. Indictments have been obtained against cold- 
storage speculators, cheese distributors, bread companies, 
grocers, meat packers, and others charged with raising the 
price of their products by illegal means. Three days after 
the Department of Justice obtained an indictment against 
a tungsten carbide monopoly, the price of tungsten carbide 
fell from $200 a pound to $48 a pound. 


48 


We Face Increased Control 

The attack on Pearl Harbor brought us abruptly to 
total war, including prices. 

Because the United States imports all but 3 percent of 
its crude rubber from the embattled Par East, a tire 
rationing program went into effect January 5; more 
than 85 percent of the Nation’s motor vehicle users will 
be unable to buy new tires. In the past, 70 to 80 percent 
of our crude rubber went into new tires. Only about a 
year’s normal supply of rubber was on hand October 31. 

War naturally means a tightening of the consumer’s 
belt. The Director of Consumer Services of the O. P. A. 
is charged with seeing that the standard of living is main¬ 
tained on the highest possible level consistent with mili¬ 
tary requirements. The Consumer Service has taken 
steps to create an aware buying public, by means of a 
field staff that aids consumers in understanding the effect 
of the war program on their daily lives, and by providing 
accurate information on good buys in food and clothing 
throughout the country. There is food enough to go 
around, but a people at war must eat the right food in 
the proper proportions. 

While prices have been held down successfully in a 
large sector of the economy, the general price level has 
continued to advance. The Office of Price Administra¬ 
tion warns that we face a disastrous inflationary spiral 
unless effective price-control legislation becomes the law 
of the land. 

Food for War 

Total war will require us to do without many things— 
but not food. Crop and livestock production for 1941 
was the greatest in the history of the country. It was the 
second consecutive record year. Unless we experience 
droughts of unparalleled severity, or divert quantities of 
some specific product, such as sugar, into war uses, we 
are not likely to have to carry ration cards during this 


49 


war. In this, we will be unique among all the warring 
nations of the world. 

The abundance of 1941 was planned. In December 1940 
the Secretary of Agriculture appealed to farmers to in¬ 
crease the 1941 spring pig crop. In response, one-seventh 
again as many pigs were farrowed. In April 1941 with 
Britain requiring vast quantities of animal protein foods 
and vitamin-rich and mineral-rich vegetables and fruits, 
the Secretary again appealed to the farmers. This time 
he asked for more milk, eggs, meats, tomatoes, and dry 
beans. Six billion pounds more milk were produced, 
276,000 more dozens of eggs, and 75,000,000 more pounds 
of meat. 

Even greater production goals have been set for 1942. 
Last fall a program was drawn up for an over-all in¬ 
crease in agricultural production of 15 percent, sufficient 
to leave us with a surplus for reserves against the future. 

For such commodities as wheat and cotton, of which 
we have huge stocks, no increase was asked. Instead, 
farmers were urged to produce more milk, eggs, meats, 
vegetables. During October and November 125,000 farmer 
committeemen visited their neighbors in every county, 
reaching nine of every ten farmers to invite them to sign 
up for increased production. 

Our entry into the war compelled farmers and govern¬ 
ment to revise these 1942 -production goals—upward. 
Especially now do we need more fats and oils, which 
means more soybeans and peanuts and flaxseed. The 
1942 farm goals now call for production 17 percent above 
1940. 

Fighting Air Raids 

To defeat the enemy’s air raids by keeping him from 
achieving his major objectives—panic, unchecked fires, 
and the loss of production—is a task for private citizens 
as well as for the Army and Navy. The Office of Civilian 


50 




Defense was established last May to mobilize the neces¬ 
sary forces from the civilian population. 

The O. C. D. has provided an organizational framework 
for volunteer efforts, with regional units under national 
supervision to assist State and local defense councils. It 
has assembled a staff of experts on air-raid protection. 
It has sent two missions to England to study and report 
on the English experience. It has drawn up plans for 
handling such emergencies as gas attacks and evacuations. 
It has published 58 pamphlets and handbooks on civilian 
protection, and of these it has distributed more than 
5,000,000 copies. Thousands of instructors, who were 
trained before Pearl Harbor, now are holding classes daily 
for volunteer policemen, firemen, and air-raid wardens. 

A civil air patrol has been established, in which it is 
planned to enroll 90,000 certified pilots, besides other 
thousands in the ground personnel. By performing many 
nonmilitary functions now assigned to the armed forces, 
these civilian volunteers will release Army and Navy 
flyers for combat duty. 

The Emergency Medical Service of O. C. D. is carrying 
out a detailed plan for the emergency expansion of med¬ 
ical facilities. The American Red Cross has made all its 
services and equipment available. Cooperation between 
the Red Cross and O. C. D. will include programs for the 
collection of blood plasma, the enrollment of medical tech¬ 
nologists and nurses, and the training of first-aid workers 
and volunteer nurses 7 aides. 

The work of organizing local defense councils has gone 
ahead, beginning with the more critical areas near the two 
coasts and extending inland. Last May there were only 
1,500 councils and many were inactive. By November 1 
there were 5,549 councils with 753,000 persons enrolled. 
Late in December there were more than 6,000 councils, 
and more than 3,500,000 volunteers had offered their 

services. 


SI 


Aliens and Antisabotage 

On the first day of the last war when our alien popu¬ 
lation was twice as large as it is now, only 63 alien enemies 
were taken into custody. More than 1,000 were appre¬ 
hended by midnight on December 8, 1941. 

This time we were well prepared for dealing with the 
alien enemy problem. Registration of more than 5,000,000 
aliens had been largely completed 1 year ago. To prevent 
the entry of undesirables or the departure of aliens with¬ 
out proper documents, our borders were practically closed. 
The size of the border patrol had been doubled. 

The Voorhis Act of 1940 had made it possible for our 
Justice Department to survey and disclose the intent, good 
or evil, of certain organizations under foreign control and 
other groups, including exiles from conquered countries 
and their sympathizers, who advocate the overthrow of 
governments. These precautions made unnecessary such 
a general round-up as took place in Great Britain in 
3940 when some 80,000 aliens were picked up. 

We know already how many aliens there are among us, 
who they are, where they are, and what they are doing. 
We realize that 95 percent of them are law-abiding and 
democracy-loving sojourners. 

Since the fall of 1939, the Federal Bureau of Investiga¬ 
tion has served as a single coordinating agency for the in¬ 
vestigation of matters bearing upon our internal security. 
It directs the hourly vigilance of its own 2,800 agents, 
especially trained in modern techniques of counter¬ 
espionage. 

Sabotage is most effectively met by preventive methods. 
More than 2 years ago a system of surveying and insti¬ 
tuting protective facilities for defense industries and 
public utilities was set up. Detailed instructions for de¬ 
tecting possible sabotage at vulnerable spots have been 
distributed widely. There have been explosions and fires 
in plants making war materials. There will be others. 
Most of these mishaps are the result of industrial acci- 


52 


dents. Compared to a similar period in the first world 
war, thus far, there has been only a negligible amount of 
sabotage. 

Communications 

A 24-hour safeguard of our home front is the policing 
of the domestic ether to run down suspicious communi¬ 
cations. Ninety-one Government monitoring stations, 
strategically placed throughout the United States and 
our possessions, patrol the entire radio spectrum. Since 
July 1940 more than 2,000 cases of illegal or subversive 
use of radio have been investigated and 23 operators have 
been convicted. Also detected have been 75 radio circuits 
operating between Germany and its agents abroad, a 
German-Japanese radio circuit, and an active radio trans¬ 
mitter in the German Embassy in Washington. 

Four particular listening posts intercept foreign broad¬ 
casts, note their contents and teletype summaries post¬ 
haste to interested government agencies. No station is 
too weak to be caught by these foreign monitoring sta¬ 
tions, and much information is gathered this way which 
is unavailable elsewhere. 

Many months ago the Defense Communications Board, 
in collaboration with the communications industry and the 
Federal Communications Commission, began adjusting 
our peacetime communication system to the defense emer¬ 
gency. As a result, commercial services are being sub¬ 
jected to few restrictions. Radio stations must go off 
the air if staying on will make them beacons to guide 
enemy planes. Fifty-five thousand amateurs were ord¬ 
ered off the air on December 8, and some of the wave 
lengths reserved for their use were diverted to military 
purposes. Commercial radio stations have granted mili¬ 
tary and defense agencies needed time on the air. Alter¬ 
nate facilities for all services have been arranged in case 
normal facilities break down or are destroyed. 

The most effective control of information that might 
help the enemy is control at the source. Citizens must 


53 


learn not to pass along facts or gossip which might even¬ 
tually reach Berlin or Tokyo. 

T ransportation 

It is not enough to produce the materials of war. They 
must be moved, and moved swiftly, by rail, by truck, by 
boat to their destination. A successful transportation 
system depends chiefly on three factors: first, fixed plant 
equipment, which means motor roads, railroad tracks, 
navigable waterways, and such things as terminals, docks, 
and repair shops; second, carrier equipment in the form 
of freight cars, trucks, buses, barges, pipe lines; third, 
the use to which these facilities are put. 

With 246,000 miles of track—30 percent of the world’s 
railroad mileage—1,300,000 miles of surfaced roads, 28,000 
miles of navigable inland waterways, and 310,000 miles 
of pipe line, the United States has enough fixed plant to 
meet the severest tests. 

We are now not only adding to equipment, but we are 
making better use of the facilities we have. Railroads, 
which carry 61 percent of our total freight load, last year 
handled 33,000,000,000 ton-miles more than in the peak 
year of 1929. To do this, the loading, unloading, and 
terminal handling of freight cars had to be speeded up; 
roundabout routings had to be curtailed. The average 
load carried by a freight car was raised nine-tenths of a 
ton—a saving in space equal to 26,000 freight cars. Ice¬ 
breaking machines opened the Great Lakes shipping 
season earlier than usual in 1941. This made possible an 
all-time record movement of iron ore by Lake boats. 

Since September 1939 the railroads have added 150,000 
new freight cars and 75,000 more are on order. They 
have 1,000 new locomotives and another 600 are on order. 
Trucks have increased from 4,600,000 to 5,000,000 in the 
past year; 4,500 miles of new pipe line have been added. 

Freight traffic, however, has increased to the point 
where it is now in close balance with the carrier capacity 


54 




of the country. To care for the added freight that war 
will bring—an increase estimated at more than 10 percent 
in 1942—new equipment will be needed and more inge¬ 
nuity exercised in using the equipment we have. The 
rationing of rubber tires will have repercussions all 
through the transportation system, and may necessitate 
far-reaching reorganization and coordination of all forms 
of transportation. This will be done by the newly created 
office of Director of Transportation. 

Housing For War Workers 

To more than 300 communities in the country, war work 
has brought a serious housing problem. For 15 months 
10 Government agencies, working under the Office of the 
Coordinator of Defense Housing, have been pushing a 
$792,000,000 program of public housing construction to 
provide these workers with shelter at reasonable rents. 

As of late December, 129,154 housing units had been 
planned, of which 63,684 were completed. More than 
43,000 homes are now under construction, with another 
20,000 waiting on the appropriation of additional funds 
by Congress. In the temporary shelter field, 8,745 trail¬ 
ers and portable homes and 11,051 dormitory units have 
been provided. 

Besides these Government-financed homes, it is esti¬ 
mated another 400,000 privately financed houses have been 
erected in these same defense areas. 

Lacking formal rent-control powers, which are part of 
the price control bill pending in Congress, the Office of 
Price Administration’s efforts to prevent rent profiteering 
have been restricted largely to the formation of so-called 
“fair rent” committees in some 150 defense areas. The 
usual practice is for the committee to select a date and 
publish a statement saying that as of that date rents were 
fair. Complaints by tenants are investigated. If land¬ 
lords refuse to lower their rents, public pressure is ex¬ 
erted. In the District of Columbia where the vast expan- 

55 


D 




sion of tlie Government’s war activities has resulted in a 
new high in the number of Government employees, rents 
have been frozen as of January 1, 1941, by an act of 
Congress. 

Keeping the Public informed 

So that the people may know at all times what their 
Government is doing, information officers are attached to 
each of the Government agencies. Questions asked by 
mail are answered by the United States Information 
Service. In addition to press releases, the Information 
Division of the Office for Emergency Management issues 
pamphlets on the work of the wartime agencies. The 
Office of Facts and Figures has been directed to “ formu¬ 
late programs designed to facilitate a wide-spread and 
accurate understanding of the status and progress of the 
national defense effort.” 

But it is also necessary to prevent any news of military 
value from reaching the enemy. To this end, an Office of 
Censorship was established on December 19, with author¬ 
ity to control all communications between the United 
States and foreign countries. 

Troop movements will henceforth be secret even in our 
own country, as ship sailings have been for a long time. 
Detailed weather forecasts can no longer be published, 
since they would furnish a timetable for enemy bombers 
and submarines. It will also be necessary to discontinue 
the publication of certain information regarding contracts, 
the selection of plant sites and other matters relating to 
procurement and production. 

In military and naval operations there will of necessity 
be delays in giving full reports to the public. One of 
the favorite propaganda tactics of the enemy is to broad¬ 
cast exaggerated rumors partly to spread confusion and 
consternation and partly to force denials and thus receive 
information as to the location of forces. As soon as the 
facts can be told without aiding the enemy, they will be 
announced officially. 


58 



Though censorship has been established, it functions on 
a voluntary basis, so far as the publishing and broad¬ 
casting of news within the country is concerned. The 
newspapers and radio chains have been asked to exercise 
certain self-restraints. The censor feels they have met 
the request loyally and wholeheartedly. 


57 


PAYING FOR THE WAR 

The Rate of Spending 

Seventeen months of rearming and 1 month of fighting 
the war have cost the American people some 15.6 billion 
dollars, in appropriations and R. F. 0. loans. This we 
have actually spent for making weapons and for training 
manpower. 

Two years ago such a prospect of spending for arms 
would have taken our breath away. After a month of 
war this huge sum does not begin to approach the cost 
of ultimate victory. 

We were relatively slow in getting started, reluctant to 
stop producing the goods of peace and to start producing 
the instruments of war. Yet the past 12 months have 
seen the highest Government expenditure in our history. 
In the calendar year 1941 we spent close to 19 billion dol¬ 
lars—as much as we spent in the previous record fiscal 
year of 1919. Defense and war accounted for 12.5 billions. 
Of this 1.8 billions were spent in the last month of the 
year alone. 

This record sum of 1.8 billion dollars, spent in the 
month of December 1941, while it exactly equals our 
defense expenditure for the last six months of 1940, 
represents only about 22 percent of the rate of national 
income for that month. For the fiscal year 1943 the 
President has submitted a budget calling for 56 billion 
dollars in war expenditures, or more than one-half of our 
national income. Britain’s war effort already is consum¬ 
ing about 50 percent of her income, while Germany has 
diverted an estimated 60 percent to war. The high Ger¬ 
man figure, however, is made possible by the systematic 


58 




looting of materials and goods from the conquered 
countries. 

Those responsible for financial policy have endeavored 
to work out a sound program of taxation and borrowing, 
which would not only produce the needed funds, but 
would also translate into action these fundamental prin¬ 
ciples; to pay as you go, so far as possible, to spread the 
burden as fairly as possible, and to avoid the dangers of 
inflation. Each of these principles called for the imposi¬ 
tion of higher taxes. 

Year by year the tax structure has been broadened to 
reach millions of Americans who never before had been 
called upon to pay direct taxes. The Revenue Act of 
June 1940 took a step in this direction by increasing the 
rates or widening the base of almost every existing tax. 
October 1940 saw the passage of a Second Revenue Act 
raising corporate income tax rates and introducing a new 
excess-profits tax. Another, though not an immediate 
source of revenue, was provided by the Public Debt Act of 
February 1941, which made the income from all future 
Government bond issues subject to Federal income taxes. 

The stepped-up defense requirements that came with 
the months that followed were reflected in the Revenue 
Act of September 1941. This act was intended to raise 
3.5 billion dollars additional revenue. A broader income- 
tax base and increased rates were expected to draw 1.1 
billion dollars more from individuals and 1.4 billions more 
from corporations. Capital stock, estate, and gift taxes 
were to yield $180,000,000 more, and excise and miscella¬ 
neous taxes to yield $850,000,000 more. 

Spreading the Harden 

The trend of personal income taxes over the past two 
years has been toward spreading the cost of arming among 
more and more Americans. Under the 1939 Revenue Act 
4,000,000 people had to pay income tax. Under the 1940 
act 7,520,000 paid taxes. This March, it is estimated, 
13,200,000 will pay income taxes. This is not quite a 


59 


third of our nonagriculturally employed civilian workers 
in November 1941. 

The 1940 act lowered the exemption of a single person 
from $1,000 to $800 and of a married person from $2,500 
to $2,000, while the 1941 act again lowered the exemptions 
to $750 and $1,500, respectively. At the same time, na¬ 
tional income was rising steadily, swelling tax returns. 
On July 1, 1940, the national income payments were at 
the rate of 74.7 billion dollars a year; on January 1, 1941, 
the rate was 81 billions; on July 1, 1941, the rate was 89 
billions; and in October 1941 the rate was 95 billions a 
year. 

Revenue from individual income taxes rose from $891,- 
000,000 in the fiscal year 1940 to 1.3 billions in 1941, a 47 
percent increase. Corporation income taxes reached 1.6 
billion dollars or 72 percent more than the preceeding 
year. A steadily rising yield from corporations in 1942 
is suggested by recent Federal Reserve figures which show 
that 416 corporations earned about 30 percent more in the 
first 9 months of 1941 than in the corresponding months 
of 1940. 

Total net receipts for the year ending last July were 
7.6 billion dollars, an increase of nearly 41 percent over 
the preceding year. 

So sudden and so vast an increase presented the Treas¬ 
ury with a number of new problems. To acquaint new 
taxpayers with their obligations and to insure prompt 
collection, two new aids for the taxpayer were devised. 
The first was a simplified tax form for those with in¬ 
comes under $3,000, a form so clear that only six simple 
steps are needed to complete it. 

The second was the tax anticipation note, introduced 
last August. These notes can be purchased at any time 
and be used in paying future taxes. In effect, those who 
invest in these notes are paying their taxes in advance and 
they receive interest for so doing. More than 2.5 billion 
dollars ’ worth had been sold by the end of 1941. 


60 


Government Borrowing 

In spite of growing tax receipts, the Government must 
look to borrowing for an ever-increasing proportion of 
the cost of war. Our net deficit, which rose from 3.6 
billion dollars in the fiscal year of 1940 to 5.1 billions in 
1941, is expected to exceed 12.6 billions by next July 1. 

To meet these deficiencies the Treasury goes to the banks 
and to the people. In the year ending July 1, 1941, the 
Treasury sold for cash just over 3 billion dollars worth of 
bonds and notes, and refunded for a similar amount three 
series of Treasury notes maturing during the year. Since 
last July there have been four major offerings to the value 
of 3.7 billions. 

Each of these issues was heavily oversubscribed. The 
latest and largest issues, for 1% billion dollars of new 
cash, were oversubscribed seven times on the very eve of 
our entry into the war. The average interest rate on the 
Government’s outstanding debt is now the lowest in our 
history, having fallen from 2.566 percent in December 
1940, to 2.409 percent in December 1941. Thus, while 
the national debt has reached the record level of more 
than $57,000,000,000 and while the Government’s borrow¬ 
ing is greater than ever, it can obtain new money more 
cheaply than ever before. 

Large-scale borrowing from banks involves serious de¬ 
cisions of policy, since these operations, by creating new 
deposits, may result in credit inflation. In line with a 
consistent anti-inflationary policy, the Treasury embarked 
last May upon a new program of borrowing directly from 
the people. Defense savings bonds, of which by January 
1, 1942, about 2.5 billion dollars’ worth had been pur¬ 
chased, were designed to reduce the volume of purchasing 
power by enlisting the current savings of millions of wage 
earners. High-pressure methods of selling were avoided. 
Stress was laid rather on the importance of systematic 
saving as a curb to price inflation. 


61 


A determined effort is being made to persuade all wage 
earners voluntarily to invest a part of their earnings regu¬ 
larly through pay-roll savings plans. 

The Fight Against InHation 

No one weapon can hope to fight inflation successfully. 
Reduction of purchasing power by means of voluntary 
savings and price fixing are vital expedients. Still 
greater taxation than we have yet envisioned may be 
necessary. 

In contrast to the last World War. when we were blind 
to the danger of inflation until it was upon us, our eyes 
are open today to this evil and to the need of controlling 
it with every weapon at the command of the Treasury and 
other departments of Government. Our response to the 
challenge of inflation may well be a test case of our ability 
to master our own destiny, of the power of a democracy 
by the application of popular mind and will to cure its 
own internal illnesses. Just as dollars alone cannot buy 
victory over the Axis, so understanding, self-discipline, 
and aggressive action by the people are needed to defeat 
inflation at home as well as the enemy abroad. 


62 


U. S. GOVERNMENT PRINTING OFFICE : 1941 
































































